Union Bank plunges into governance crisis as CBN’s new minimum capital requirement ends
Union Bank of Nigeria Plc has been plunged into a deepening governance crisis after a court ruling overturned regulatory intervention, setting off a high-stakes legal battle that now pits investor rights against financial stability concerns in Africa’s most populous nation.
The Central Bank of Nigeria (CBN) has escalated its fight to retain control over the lender, filing an appeal against a March 25, 2026, judgment of the Federal High Court in Lagos that nullified its 2024 takeover of the bank and ordered the reinstatement of its former board and management.
The ruling effectively unwinds nearly two years of regulatory control. It throws into question a recapitalisation process that had been underway, leaving Union Bank caught in a boardroom tussle just as the broader banking sector pushes to meet new capital thresholds.
In its latest filings at the Court of Appeal, the central bank is also seeking a stay of execution of the judgment, warning that allowing the decision to take immediate effect could destabilise the lender and undermine confidence in Nigeria’s financial system. The dispute dates back to January 2024, when the regulator dissolved the boards of Union Bank, Keystone Bank and Polaris Bank, citing corporate governance lapses, regulatory breaches and what it described as deteriorating financial conditions. A new management team was installed to stabilise operations and drive a recapitalisation plan. That intervention, however, triggered a backlash from core shareholders, including Titan Trust Bank Limited and affiliated entities, who challenged the move in court, arguing that the apex bank acted outside its statutory powers and diluted their ownership stakes without due process. After months of legal proceedings, the Federal High Court ruled in favour of the shareholders, declaring the CBN’s actions unlawful and unconstitutional, and ordering the immediate restoration of the bank’s previous board. The court also voided decisions taken under the CBN-appointed management and halted the recapitalisation exercise. The judgment has created a delicate situation for Union Bank, with competing claims over control and uncertainty over which governance structure should prevail pending the outcome of the appeal.
The central bank, in its appeal, maintained that its intervention was firmly grounded in the Central Bank of Nigeria Act and the Banks and Other Financial Institutions Act 2020, arguing that it acted in response to severe prudential concerns at the lender. According to the regulator, Union Bank was grappling with a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and elevated non-performing loans at the time of the takeover—conditions it said posed risks not only to depositors but to the broader financial system. The CBN argued that the lower court failed to properly interpret provisions of the banking law that grant it wide-ranging powers to intervene in distressed institutions, including removing directors and appointing new management in crisis situations. It also faulted the aspect of the ruling that restrains it from exercising regulatory oversight over the bank, describing it as an undue limitation on its statutory mandate and a potential threat to effective supervision of the financial system.
As part of its application for a stay of execution, the apex bank is seeking to restrain the reinstated directors and other parties from taking steps to enforce the judgment, including assuming control of the bank, altering its governance structure or interfering with ongoing operations. The regulator further urged the court to direct all parties to maintain the status quo and refrain from actions or public statements that could destabilise the lender while the appeal is being determined. At the heart of the case are broader legal and policy questions about the limits of regulatory authority in Nigeria’s banking sector and the extent to which the central bank can act unilaterally in times of financial stress. For investors, the case raises concern about the protection of shareholder rights and the predictability of regulatory actions. For regulators, it underscores the challenge of balancing market confidence with the need for swift intervention to prevent systemic crises. Union Bank has sought to reassure customers that its operations remain stable, but the unfolding legal battle has introduced a layer of uncertainty at a time when the industry is navigating sweeping recapitalisation requirements. With the appeal now underway, the outcome is likely to set a precedent that could reshape the relationship between regulators and financial institutions in Nigeria, determining how far authorities can go in stepping into troubled banks without triggering legal and investor backlash.
